Michael Roberts – COP15: the two horsemen of the apocalypse

Still another farce by governments to protect the destruction of the environment by corporations.

Michael Roberts is an Economist in the City of London and a prolific blogger

Cross-posted from Michael’s Blog

Canada at COPO15

COP15 started this week in Montreal, Canada.  This is the UN’s biodiversity summit.  In effect, it is an international meeting to discuss how to cope with and reduce the impact of global warming and environmental destruction on nature.  As Carter Roberts, the US head of the World Wildlife Fund, put it: “It’s like two horsemen of the apocalypse — one is climate change and one is nature. They’re wound up with each other.”

“Humanity has become a weapon of mass extinction and governments must end the “orgy of destruction”, the UN secretary general, António Guterres, said at the beginning of the meeting.  “We are out of harmony with nature. In fact, we are playing an entirely different song. Around the world, for hundreds of years, we have conducted a cacophony of chaos, played with instruments of destruction. Deforestation and desertification are creating wastelands of once-thriving ecosystems,” he said.  “Our land, water and air are poisoned by chemicals and pesticides, and choked with plastics … The most important lesson we impart to children is to take responsibility for their actions. What example are we setting when we ourselves are failing this basic test?” 

All this must remind us of what Marx called a ‘metabolic rift’ between human activity under capitalist production and nature (see my recent review of Kohei Saito’s book).

The Canadian government hosts of COP15 have come up with a target of ‘saving’ 30% of the world’s land mass for ‘nature’.  But even that figure would mean yet further encroachment into the forests of the Amazon and other yet untouched areas in Africa and Asia.  And what about the existing environmental damage being caused by the previous destruction of forests, the pollution of our rivers, oceans, and our cities full of waste and chemicals etc?

The official and mainstream solutions to meeting the 30% target and ending the polluting of the planet remain market-based.  For example, the leading authority on the ‘economics of diversity’ is Partha Dagupta, from Cambridge University.  He wants governments to impose export taxes on primary commodities like palm oil and rare earth metals to reduce demand.  Dasgupta also proposes a global oceans tax on marine traffic, with the proceeds used to compensate developing countries for biodiversity losses.

Behind these policies is his view (and that of the World Bank) that in some way nature can be priced or valued so that taxes and subsidies can be introduced to guide private capital investment, ie make ‘investing in nature’ profitable.  Dasgupta has tried to quantify the value of natural assets.  The UN looks to multi-national companies to “scrutinise their supply chains” in order to reduce negative impacts, and offset the others using “high-integrity nature markets”.

Mainstream economics’ attempts to measure a country’s wealth to include all assets that contribute to our economic wellbeing, from buildings and factory machines, to infrastructure, human and social ‘capital’ and ‘natural capital’, is deeply flawed. Natural capital accounts (NCA) as they are called, are sets of data for material natural resources, such as forests, energy and water.  But these national accounts are limited to the production boundary of the economy.  They do not account for natural goods and services that aren’t subject to market transactions and don’t necessarily have well-established market prices.  

Wealth and value are not the same.  From the very beginning of Marx’s Capital, he makes a distinction between wealth in societies and how it appears in the capitalist mode of production.  Wealth is more than just a collection of commodities owned by capital and valued in money.  That is the form that wealth takes under capitalism.  Wealth is the accumulation of products and activities that meets human needs; ie the accumulation of use values. And those use values include natural resources as well as the products of human labour. 

Under capitalism, the meaning of wealth excludes human social needs as well as the impact on wealth from environmental degradation, pollution, exploitation and inequalities.  These are not accounted for in the capitalist accumulation of private wealth.  Because of that, capitalist economies are not only destructive and wasteful; capitalism is unfit for the purpose of delivering real wealth to humanity.

COP15’s answer is the conventional mainstream one.   And it promotes the private sector as the funding source of policy action, arguing for “major progress on incorporating Environmental and Social Governance (ESG) considerations into investing choices.” World Bank).  This is ironic when the evidence of the failure of ‘ethical investing’ is growing by the day.

Tariq Fancy was the chief investment officer for ‘sustainable investing’ at BlackRock, which is the most important institutional face of the claim that ESG investing has an important role to play in helping the environment, promoting the social good, holding the corporate world accountable, and so on.  Fancy thinks the ESG project is intellectually bankrupt and is damaging.  “In my role at BlackRock, I was helping to popularise an idea that the answer to a sustainable future runs through ESG and sustainability and green products, or in other words, that the answer to the market’s failure to serve the long-term public interest is, of course, more market.  A bit like the NRA’s traditional answer to mass shootings and related concerns around public safety — the answer is more guns.”

Fancy goes on: “They must know that they’re exaggerating the degree of overlap between purpose and profit . . . These leaders must know that there is no way the set of ideas they’ve proposed are even close to being up to the challenge of solving the runaway long-term problems . . . And right now all of the other stuff they’re saying — the marketing gobbledegook— is actively misleading people.”

Fancy makes the key points that ESG investing is clearly less profitable than ‘ordinary’ investments and the size of ESG investment is tiny compared to general investment.  The UN reckons that investment in ‘nature-based solutions’ must increase to $384bn a year by 2025, more than double current flows – not much chance of that.  ESG investment now stands at $2.5trn compared to total invested assets of $360trn globally.

Fancy concludes Corporations, and the whole legal and social apparatus in which they sit, were built around the idea that companies exist to maximise shareholder wealth. That’s what they are designed to do and are required to do. Thinking that fiddling around in the financial markets is going to make companies fit for a radically different purpose — helping with broad social problems driven by economic externalities and tricky collective action problems — is simply bonkers.”

Michael Roberts

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